A Mixture Model of Household Retirement Choice
AbstractThis paper analyzes the labor market participation behavior of the elderly couples when a new option (early retirement) becomes available to the husband. Unlike other studies of household labor supply model, which assume that all the households follow the same decision making structure, we assume there are two types of household, the cooperative type and the non-cooperative type. When facing the choice problem, those belong to the non-cooperative type behave according to a Stackelberg game with male as the leader, while those of the cooperative type follow a simple unitary model. Under this assumption, we formulate a mixture model using the latent class analysis framework. This model explicitly takes account of the unobserved heterogeneity in decision making structures. The empirical estimation of the model is based on register data from Statistics Norway. We find that more than half of the households belong to the non-cooperative type. And these households on average have lower education level than those of the cooperative type. Our conjecture is that this may suggest that it is easier for higher education couples to communicate and compromise to reach a efficient solution.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 04/2003.
Length: 21 pages
Date of creation: 09 Apr 2003
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
household labor supply; retirement; latent class analysis; heterogeneity; econometric models;
Find related papers by JEL classification:
- D10 - Microeconomics - - Household Behavior - - - General
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
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